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Whether the policy of RBTVAT has promoted the expansion of UCIBs: Quasi-natural experiment based on new statistical scope data

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  • Wu, Qingchuan
  • Gong, Yuanyuan
  • Yan, Zhijuan

Abstract

The expanded offerings of urban construction investment bonds (UCIBs) is an important component of the implicit debts of local governments in China. Based on the new statistical scope panel data on UCIBs of prefecture-level cities from 2010 to 2013, this paper constructs a quasi-natural experimental difference-in-difference (DID) model to investigate whether the “replacing business tax with value-added tax” (RBTVAT) policy has stimulated the expansion of UCIBs. The results showed that this policy has promoted the expansion of UCIBs, and such positive influence is only exists in the economically developed eastern region. The findings add to the recognition that when a country implements a tax policy reform, it should take full account of the possibility that it will increase the financial risk of local governments.

Suggested Citation

  • Wu, Qingchuan & Gong, Yuanyuan & Yan, Zhijuan, 2021. "Whether the policy of RBTVAT has promoted the expansion of UCIBs: Quasi-natural experiment based on new statistical scope data," International Review of Financial Analysis, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:finana:v:77:y:2021:i:c:s1057521921001551
    DOI: 10.1016/j.irfa.2021.101821
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    Cited by:

    1. Zhang, Ailian & Pan, Mengmeng & Liu, Bai & Cao, Xianbin, 2023. "Do high-speed rail (HSR) station and airport affect local government debt risk? Evidence from China," Transport Policy, Elsevier, vol. 134(C), pages 41-51.
    2. Zhang, Ke, 2023. "Government's implicit guarantee and the credit spread of the quasi-municipal bonds," Finance Research Letters, Elsevier, vol. 55(PA).

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